Page 59 - EASTERN POLYMER GROUP | ANNUAL REPORT 2015

Risk Factors
Risk factors as mentioned in this document are based on
information in the current situation and future prediction as
far as can be determined. These risk factors contain certain
material implication which may adversely affect the
company and its stock value. Besides the aforementioned
risk factors cited in this document, there may be other risks
unknown to the company, or considered immaterial at
present, but can affect future operating result of the
company. In addition, forward looking statements as
appeared in this document such as “it is believed to be”,
“it is anticipated that”, “it is expected that”, “it is planned group (only subsidiaries) have purchasing guidelines by
to”, “intended to” or “estimated to” etc or the forecast about
operating result, business, business plan, change of law
associated with the business of the company, subsidiaries
and affiliated entities, including government policies and
others, are the prediction of future events. As a result, the
actual outcome may materially differ from the calculation
or prediction. For information that refer to or related to the
government or the economy of a country, they are obtained
from public domain or other reliable sources.
Risks related to business operation
Risks related to overall business operation of
Eastern Polymer Group Public Company Limited
Risks from procurement of raw materials and volatility of
raw material price
The Company manufactures and distributes Polymer and
Plastic Converter for different industries. Therefore, one of
the main cost of sales is raw material cost which is
estimated to 50-60% of the cost of sales. As a downstream
manufacturer, the Corporate group may be affected in the
event of insufficient supply of polymer for production which
can result in business stopped.
In addition, polymer is a by product from oil refinery
process which means the quantity and price of polymer
vary according to the quantity and price of crude oilwhich
are depended on world economy and political factors.
Prices of plastic beads which the company uses in main
business such as PP, PET, PS, and HDPE fluctuate in the
same direction with fluctuation of crude oil price. The
company cannot accurately forecast or control the price
factors of plastic beads. Therefore, of the rise of polymer
price may materially affect the company’s profitability and
result in decreasing profit or causes the corporate group
to incur losses.
Nonetheless, the Corporate group are aware of the
importance of procurement and cost management of
polymer,As such; a strict measure to prevent such ricks is
imposed. Quantitatively speaking of polymer, the corporate
maintaining good relationship with all suppliers. At present,
Eastern Polymer Group purchase raw materials of plastic
and polymer from more than 40 suppliers, both domestic
and abroad (Global Sourcing). Such Policy helps managing
risk to certain degree. According to the purchase records
for the entire fiscal year of 2015 (April 2014 – March 2015)
it was estimated that almost 50% of raw materials, the
corporate grouppurchased from foreign suppliers.
Including in the purchase of raw material, the corporate
groupwould inquire about selling prices and trading terms
with every trading partner in each class to ensure the
corporate group receive the highest benefit and the best
trading term. Besides, to assure the corporate group of
efficiency in raw material cost management for each
purchasing order, the corporate group will compile on the
demand for polymer to increase purchasing volume, in
order to increase the corporate group’s bargaining power.
Despite the fact that volume purchase may provide price
advantage to the corporate group, it does not render the
corporate group the ability to minimize the fluctuation of
polymer price. Presently, financial instruments that can
reduce aforesaid risk are not available in Thailand.
Therefore, the corporate group still expose to such risk.
However, Eastern Polymer Group can manage some risk
by passing polymer cost to customers. Such method takes
an estimated time of 3 – 6 month. Besides, to manage risk
in other parts apart from contract manufacturing, the
57Eastern Polymer Group Public Company Limited